There are certain transactions for which even though consideration is not received, will be treated as supply. According to GST Schedule I, transactions between related persons and other activities of the schedule will be treated as supply even if made without any consideration. Such type of transactions is mostly between parties which are related or between an agent and a principal. The parties pay GST and can later claim it as input tax credit.

1.  Who is a related person under GST?

Persons shall be deemed to be related if they fall under any of the categories below:

1. Officer/ director of one business is the officer/ director of another business
2. Businesses are legally recognized as partners
3. An employer and an employee
4. Any person holds at least 25% of shares in another company either directly or indirectly
5. One of them controls the other directly or indirectly
6. They are under common control or management
7. The entities together control another entity
8. They are members of the same family

2. Open market value of such supply

Open market value is the value of the supply between two unrelated entities. When a supply is between two related entities, there is a high possibility that the prices will be influenced by their relationship.

3.  Treatment for importing services/goods from related person

If any import of services is made by a taxable person from a related person or from any of his other establishments outside India, then for business purposes, it will be treated as supply.

4.  Permanent transfer of business without consideration

According to Schedule-I, permanent transfer or sale of business assets on which input tax credit has been availed will also be treated as supply even if there is no consideration received. GST is required to pay on such type of transaction. GST is applicable to the sale of business assets only.